China’s Economic Growth Slows Sharply as Covid Policy Takes Toll

The Chinese economy grew this spring at its slowest rate since the beginning of the coronavirus pandemic, putting into sharp relief the impact of a Covid-19 policy that continues to prompt widespread lockdowns and mass quarantines, bringing some business activity to a halt.

The economy expanded 0.4 percent from a year earlier in the second quarter, the National Bureau of Statistics reported on Friday. That was the lowest pace of growth since the first three months of 2020, when China effectively shut down to fight the coronavirus, its economy shrinking for the first time in 28 years.

That 2020 downturn was short-lived.

While the world dealt with the crushing effects of the pandemic, the Chinese economy recovered almost immediately, aided by virus restrictions that kept infections and deaths to a minimum. The current outlook, though, is not as promising. Even historically reliable indicators, such as property and manufacturing, have become far less dependable.

The most recent economic malaise hit in April and May, when Shanghai, China’s largest city, went into lockdown for nearly two months and the impact rippled through the economy. Office buildings were closed, and workers were ordered to remain at home. Throughout China, hundreds of millions of consumers were shut in — leaving stores, restaurants and service providers to carry on without customers.

Delays at the port in Shanghai, one of the busiest in the world, took an already congested supply chain and brought it to a standstill. The few factories that managed to stay open did so by having workers live and sleep on-site to prevent further spread of the virus.

Retail sales, an indicator of how much consumers are spending, fell 4.6 percent in the three months to June from a year earlier, the government said.

This is a developing story. Check back for updates.

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